April shutdown cuts Taylor Wimpey’s production by 6,000 homes

The shutdown in the UK around April because of coronavirus reduced the number of new homes that Taylor Wimpey built last year by more than 6,000.

The housebuilder said that UK home completions had dropped by 39% from 2019, reaching 9,609 last year, largely due to the shutdown.

It echoes other falls from its rivals, as building sites were forced to stand empty for several weeks during the start of the pandemic.

Yet Taylor Wimpey said it will still manage to meet expectations when it presents its results for 2020 in March this year.

Analysts expect operating profit to reach £293 million, including Taylor Wimpey’s share of its joint ventures.

“While operations were impacted by the shutdown period in the second quarter, the subsequent return to near-normal construction capacity and continuing resilience of the UK housing market enabled sales and production to recover strongly towards the end of the year,” said chief executive Pete Redfern.

The business has been investing in more land in the second half of the year, echoing rival Barratt Development, which said last week it had bought more than 5,600 plots since August.

Mr Redfern said that high quality land had come on to the market for attractive margins in the second half of the year.

He added: “We start the year with an excellent order book and ongoing focus on strengthening the business and improving margins.

“This will position Taylor Wimpey well to deliver strong and reliable returns for our stakeholders over the medium term.”

A fifth of people decided to pull out of their plans to buy a home across the year, however the cancellation rate dropped back to more normal levels of 16% in the last quarter.

Average selling prices increased by 7% to £288,000 over the year.

CMC Markets analyst Michael Hewson said: “Management have said they expect to recommence dividend in 2021, starting with the 2020 final dividend, though it is notable that they haven’t completely committed to it yet, which may help explain the early share price weakness. That, and reviewing the 2021 special dividend for payment on 2022.”